You Can't Pay Them Enough: Subsidies, Environmental Law and Social Norms
45 Pages Posted: 19 Dec 2005
Governments' choice of instrument to address environmental concerns affects not only the relative prices faced by individuals making choices but also their norms or values. This effect on values is important because some argue that traditional instruments (such as taxes and regulations) are insufficient to address new environmental concerns such as climate change. Instead they argue that individuals must change their values - how they view the environment and its relationship to humans. This paper uses the social norms literature from law and economics to examine the impact of one instrument - subsidies - on values in the context of climate change. Climate change is particularly difficult for social norms to address because of its large number, negative payoff nature. Further, law and economics tends to take values as given and does not fully address the internalization of norms or values. This paper discusses the potential impact of government policies both on norms or values that are externally enforced (such as through reputation) and on internalized norms. It argues that governments should consider the impact of instrument choice on both types of norms or values and that subsidies may have a negative impact on environmental norms or values, depending on how they are implemented.
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